Method and system for processing data relating to investment products having a payment guarantee

ABSTRACT

A computer system for processing data relating to an investment arrangement having an account value dependent on investment performance and available for withdrawal by an account owner includes a data storage device storing data indicative of a present account value, a withdrawal factor value, a present payment base value, and a guarantee of payments available periodically for a term without reduction of the payment base value; and a processor. The processor is configured to, for periods after a first withdrawal, determine the present payment base value by comparing a present account value to a prior period account value, a periodic increase in the payment base value being limited to a maximum percentage; and determine an available maximum withdrawal without reduction of the payment base value based on the withdrawal factor value and a greater of the present account value and the present payment base value.

CROSS-REFERENCE TO RELATED APPLICATIONS

This application is a continuation of co-pending U.S. patent applicationSer. No. 11/983,547, entitled METHOD AND SYSTEM FOR A DEFERRED VARIABLEANNUITY WITH LIFETIME BENEFIT PAYMENTS, filed Nov. 9, 2007, whichapplication claims priority to application Ser. No. 60/961,812, filedJul. 24, 2007, the entire contents of all of which are incorporatedherein by reference for all purposes.

BACKGROUND OF THE INVENTION

1. Field of the Invention

The present invention relates to a method and system for administering avariable annuity with lifetime benefit payments; and more particularly,to a data processing method for administering a deferred variableannuity contract, the annuity contract having a payment base value, acontract value, and lifetime benefit payments, wherein the lifetimebenefit payment available for each period is the greater of (i) (thepayment base)×(the withdrawal percent); and (ii) (the contractvalue)×(the withdrawal percent).

2. Description of the Prior Art

An immediate annuity is typically used to provide an income streamwithin a predetermined length of time from the date the premium isreceived. The amount of income can be either fixed or variable in natureand typically these products do not provide an account value. A deferredannuity is typically used to provide accumulation and, potentially, afuture stream of annuity income. The deferred annuity comprises anaccumulation period during which the account value will vary with theunderlying investments and an annuitization period where the clientpurchases an immediate annuity with the account value available.Deferred and immediate annuities typically provide guaranteed income forlife which transfers some portion or all of the risk of outliving one'saccumulated assets to the insurer.

One basis for distinguishing commonly available deferred annuities iswhether the annuity is classified as a “fixed annuity” or a “variableannuity”.

In a fixed annuity, the insurer guarantees a fixed rate of interestapplicable to each annuity deposit. Therefore, a fixed annuity isdesirable for those seeking a “safe” investment. The guaranteed interestrate may apply for a specified period of time, often one year or more.Often, a rate guaranteed for more than one year is called a “multi-yearguarantee”. The rate credited on a fixed annuity is reset periodically,moving in an amount and a direction that correlate the yields availableon fixed-income investments available to the insurer.

With a variable annuity, the annuity contract owner bears the investmentrisk. The relevant life typically has a choice of funds in which he/shecan direct where the annuity deposits will be invested. The variousfunds or sub-accounts may include stocks, bonds, money marketinstruments, mutual funds, and the like.

Variable annuity contracts typically provide a death benefit. Oftentimesduring the accumulation period this death benefit is related to thecontract value. That is, if the sub-accounts backing the contract valuehave performed poorly, then the death benefit may be reduced to aninsignificant amount. After annuitization, the death benefit can be afunction of the remaining payments of the annuity at the time of therelevant life's death. Further, if the annuity contract does not providea guarantee (discussed below), the contract will terminate when thecontract value goes to zero or some other amount specified in thecontract or rider.

Annuity contracts may also provide guarantees in several differentvariations. A Guaranteed Minimum Death Benefit (GMDB) is a guaranteethat provides a minimum benefit at the death of the relevant liferegardless of the performance of the underlying investments. AGuaranteed Minimum Income Benefit (GMIB) is a guarantee that willprovide a specified income amount at the time the contract isannuitized. The income payment will be dependent on previously stateddetails set out in the contract. A Guaranteed Minimum AccumulationBenefit (GMAB) is a benefit that guarantees a specified contract valueat a certain date in the future, even if actual investment performanceof the contract is less than the guaranteed amount. A Guaranteed MinimumWithdrawal Benefit (GMWB) is a guarantee of income for a specifiedperiod of time, and in some versions, the income stream is guaranteedfor life without requiring annuitization as in the guaranteed minimumincome benefit. However, this guarantee will automatically annuitize thecontract if the contract value is reduced to zero or some other amountspecified in the contract or rider.

Prior art annuity products typically determine the amount of thelifetime benefit payments, if any, to be a predetermined percentage of awithdrawal base. The withdrawal base amount is typically set at the timeof the first lifetime benefit payment and is fixed for the remainder ofthe term of the annuity product. Furthermore, the withdrawal base amountis typically based on either the payment base or the contract value, butnot the greater of the two.

Many financial products have been disclosed. These include financialproducts having software for determining deferred and immediate annuitycontract values, systems and method of administration of annuitycontracts wherein variable annuity contracts include a bonus investmentcredit percentage, withdrawal charge percentages less than or equal tothe bonus investment credit percentage in all contract years, and levelasset-based compensation to distributors. These all contain at least oneof the following disadvantages: the amount of the lifetime benefitpayments is determined to be a predetermined percentage of a withdrawalbase; the withdrawal base is typically fixed for the remainder of thecontract; and the withdrawal base decreases for the remainder of theterm. Further, the withdrawal base in prior art annuity products istypically based on either the payment base or the contract value, butnot both.

Accordingly, there remains a need in the art for a data processingmethod for administering a variable annuity contract for a relevant lifewherein the annuity contract has lifetime benefit payments and whereinthe lifetime benefit payment for each period is the greater of (i) (thepayment base)×(the withdrawal percent); and (ii) (the contractvalue)×(the withdrawal percent).

SUMMARY OF THE INVENTION

The present invention provides a data processing method foradministering a deferred variable annuity contract during theaccumulation phase wherein the annuity contract has a guarantee oflifetime benefit payments and wherein the lifetime benefit payment foreach period is the greater of (i) (the payment base)×(the withdrawalpercent); and (ii) (the contract value)×(the withdrawal percent). Inprior art annuity products, the amount of the lifetime benefit payments,if any, is determined to be a predetermined percentage of a withdrawalbase. This withdrawal base typically is fixed for the remainder of thecontract, or alternatively, decreases for the remainder of the term.Further, the withdrawal base in prior art annuity products is typicallybased on either the payment base or the contract value, but not both.

Generally stated, the method of the invention determines a presentpayment base value for the annuity contract. Preferably, the paymentbase value is a function of the previous premium payments andwithdrawals by the relevant life, and could include investmentperformance on an annual or other basis (daily, monthly, etc.). Themethod determines a present contract value. The method determines awithdrawal percent for the annuity contract. During the accumulationphase the system performs the following steps: (i) if requested by therelevant life, periodically accepting premium payments from the relevantlife which increase the payment base and the contract value; (ii) ifrequested by the relevant life, or if other defined criteria arereached, periodically calculating a lifetime benefit payment withdrawalfor the relevant life which decreases the contract value, wherein theguaranteed lifetime benefit payment is determined as the greater of thefollowing formulas:

Living benefit payment (LBP) withdrawal=(the present payment base)×(thewithdrawal percent);

Living benefit payment (LBP) withdrawal=(the present contractvalue)×(the withdrawal percent);

and (iii) if requested by the relevant life, periodically calculating awithdrawal payment—that is in excess of the lifetime benefit payment—forthe relevant life from the contract value which decreases each of: thecontract value and the payment base. Upon the death of the relevantlife, the present method calculates a death benefit to a beneficiary,wherein the death benefit is the greater of: (a) the guaranteed deathbenefit amount; and (b) the present contract value.

Preferably, the annuity contract of the data processing method is adeferred variable annuity and further includes sub-accounts whose marketperformance can cause the contract value to decrease. In other aspectsof the invention, the annuity contract may be selected from the group offixed, combination variable/fixed, and equity indexed annuities.

In addition, the account may be subject to M, E & A, 12 b-1 and fundlevel charges. These charges may or may not be assessed against thecontract value.

The guaranteed death benefit is paid to the beneficiary only if therelevant life dies during the accumulation phase. However, a guaranteeddeath benefit may also be payable during annuitization as well. Thelifetime benefit payment may be paid once yearly or periodicallythroughout the year; however, there is a maximum lifetime benefitpayment for any given year. In prior art annuity products, the relevantlife receives lifetime benefit payments that are based on a fixedwithdrawal base, or a withdrawal base that decreases over time. On theother hand, the present method allows the relevant life to have theopportunity to request a lifetime benefit payment during each periodthat is up to the greater of (i) (the payment base)×(the withdrawalpercent); and (ii) (the contract value)×(the withdrawal percent).Therefore, the lifetime benefit payment is not based on a percentage ofa fixed withdrawal base amount, and the withdrawal base amount mayincrease depending on the performance of the underlying investments ofthe annuity product and if the contract value is greater than thepayment base value during a given period. However, if the contract valueis less than the payment base, then the available lifetime benefitpayment is a percentage (withdrawal percent) of the payment base.Accordingly, the relevant life has the opportunity to request a lifetimebenefit payment that has the potential to afford a greater monetaryvalue then the lifetime benefit payments of prior art annuity products.

In one aspect, the value of the annuity payments, if necessary, equalsthe value of the last guaranteed lifetime benefit payment. In otheraspects, excess withdrawals, required minimum distributions or step-upscould cause the value of the annuity payments or guaranteed lifetimebenefit payments to change.

In another aspect of the invention, there is provided a data processingmethod for administering a deferred variable annuity contract, theannuity contract having a payment base, a contract value and lifetimebenefit payments, comprising the steps of: (i) determining a presentpayment base value; (ii) determining a present contract value; (iii)determining a withdrawal percent; and (iv) calculating a lifetimebenefit payment, wherein the lifetime benefit payment is determinedaccording to the following formula:

LBP=the greater of:

-   -   (i) “the guaranteed lifetime benefit payment”−(the present        payment base)×(the withdrawal percent); and    -   (ii) “the maximum lifetime benefit payment”−(the present        contract value)×(the withdrawal percent).

The invention can comprise a deferred variable annuity contract having apayment base, a contract value and lifetime benefit payments,comprising: (i) means for determining a payment base; (ii) means fordetermining a contract value; (iii) means for determining a withdrawalpercent; (iv) means for calculating a lifetime benefit payment; whereinthe lifetime benefit payment is determined according to the followingformula:

LBP=the greater of:

-   -   (iii) “the guaranteed lifetime benefit payment”−(the payment        base)×(the withdrawal percent); and    -   (iv) “the maximum lifetime benefit payment”−(the present        contract value)×(the withdrawal percent).

The present invention solves several of the problems associated withconventional administration of annuity products. Determination of thelifetime benefit payment is accomplished via an improved formula thatprovides the potential to afford a greater monetary value for thelifetime benefit payment than prior art annuity products. The relevantlife is afforded increased security by the availability of a potentiallyenhanced lifetime benefit payment.

Other objects, features, and characteristics of the present invention,as well as the methods of operation and functions of the relatedelements of the structure, and the combination of parts and economies ofmanufacture, will become more apparent upon consideration of thefollowing detailed description with reference to the accompanyingdrawings, all of which form a part of this specification.

BRIEF DESCRIPTION OF DRAWINGS

A further understanding of the present invention can be obtained byreference to a preferred embodiment set forth in the illustrations ofthe accompanying drawings. Although the illustrated embodiment is merelyexemplary of systems for carrying out the present invention, both theorganization and method of operation of the invention, in general,together with further objectives and advantages thereof, may be moreeasily understood by reference to the drawings and the followingdescription. The drawings are not intended to limit the scope of thisinvention, which is set forth with particularity in the claims asappended or as subsequently amended, but merely to clarify and exemplifythe invention.

For a more complete understanding of the present invention, reference isnow made to the following drawings in which:

FIG. 1 is a flow chart illustrating the manner in which a new annuitycontract application is processed;

FIG. 2 is a flow chart that illustrates in more detail the manner inwhich an annuity contract is established;

FIG. 3 is a flow chart that illustrates in more detail the manner inwhich an account value is set up;

FIG. 4 is a flow chart that illustrates in more detail the manner inwhich customer communication is established;

FIG. 5 is a flow chart illustrating the appropriate steps after awithdrawal is requested;

FIG. 6 is a flow chart illustrating a preferred embodiment of thepresent invention comprising a data processing method for administeringan annuity contract for a relevant life;

FIG. 7 is a diagram illustrating the system on which the presentinvention is implemented in accordance with an embodiment of the presentinvention;

FIG. 8 depicts a table illustrating lifetime benefit payments as afunction of time for annuities associated with various withdrawal basesin accordance with an embodiment of the present invention;

FIG. 9 depicts a table illustrating lifetime benefit payments as afunction of time for annuities associated with drawal bases inaccordance with an embodiment of the present invention; and

FIG. 10 depicts a graph illustrating lifetime benefit payments as afunction of time for annuities associated with various withdrawal basesin accordance with an embodiment of the present invention as describedin FIG. 8 and FIG. 9.

DESCRIPTION OF THE PREFERRED EMBODIMENTS

As required, a detailed illustrative embodiment of the present inventionis disclosed herein. However, techniques, systems and operatingstructures in accordance with the present invention may be embodied in awide variety of forms and modes, some of which may be quite differentfrom those in the disclosed embodiment. Consequently, the specificstructural and functional details disclosed herein are merelyrepresentative, yet in that regard, they are deemed to afford the bestembodiment for purposes of disclosure and to provide a basis for theclaims herein, which define the scope of the present invention. They aredeemed to afford the best embodiment for purposes of disclosure; butshould not be construed as limiting the scope of the invention. Thefollowing presents a detailed description of the preferred embodiment ofthe present invention.

The present invention comprises a data processing method foradministering a deferred variable annuity contract having a paymentbase, a contract value, and lifetime benefit payments. As used herein,the term “annuity contract” means a set of rules and other data that arereflected in a computer processing system for operations of the annuityproduct. The lifetime benefit payment is not a percentage of a fixedvalue. Instead, the lifetime benefit payment available for each periodis the greater of (i) (the payment base)×(the withdrawal percent); and(ii) (the contract value)×(the withdrawal percent). The present dataprocessing method is preferably in the form of a rider to a variableannuity contract. In another aspect of the invention, the present dataprocessing method is not in the form of a rider, but is a part of thebase contract. In exchange for paying higher fees, the relevant lifereceives several advantages by selecting the method and system of thepresent invention which provides a lifetime benefit payment availablefor each period that is the greater of (i) (the payment base)×(thewithdrawal percent); and (ii) (the contract value)×(the withdrawalpercent). These advantages include the following: the relevant life willhave the opportunity to request a lifetime benefit payment during eachperiod that is up to the greater of (i) (the payment base)×(thewithdrawal percent); and (ii) (the contract value)×(the withdrawalpercent). Therefore, the lifetime benefit payment is not based on apercentage of a fixed withdrawal base amount, and the withdrawal baseamount may increase depending on the performance of the underlyinginvestments of the annuity product and if the contract value is greaterthan the payment base during a given period. However, if the contractvalue is less than the payment base, then the available lifetime benefitpayment is a percentage (withdrawal percent) of the payment base.Accordingly, the relevant life has the opportunity to request a lifetimebenefit payment that has the potential to afford a greater monetaryvalue then prior art annuity products. Significantly, the relevant lifetakes advantage of the higher value as between the payment base andcontract value, as measured at the anniversary date of each contractperiod. The present invention therefore allows living benefit paymentsin excess of the guaranteed amount without negatively impacting thebenefits of the contract. The present invention allows for upsidepotential for living benefit payments, and it provides potentiallyhigher living benefit payments while having the security of a knownguaranteed benefit for life.

The present invention comprises a data processing method foradministering a deferred variable annuity contract for a relevant life,the annuity contract having a payment base, a contract value and aguarantee of lifetime benefit payments, comprising the steps of: (i)determining a present payment base; (ii) determining a present contractvalue; (iii) determining a withdrawal percent; and (iii) calculating alifetime benefit payment wherein the lifetime benefit payment is thegreater of (i) (the payment base)×(the withdrawal percent); and (ii)(the contract value)×(the withdrawal percent).

The following definitions are given hereunder to better understand termsused in the specification.

“Relevant Life” or “Covered Life”: The term relevant life or coveredlife is the governing life for determination of the living benefitsprovided under this illustrative embodiment. Covered life (or relevantlife) may refer to any one or more of the following: an owner, jointowner, annuitant, joint annuitant, co-owner, co-annuitant orbeneficiary.“Withdrawal Base”: The withdrawal base is the amount used in oneembodiment of the present invention to determine the lifetime benefitpayment. Preferably, the withdrawal base may be equal to the amount ofthe original premium, the payment base value, the contract value, or thegreater of the payment base value and the contract value.“Payment Base”: The payment base (PB) (or more accurately the paymentbase value) is the amount used in one embodiment of the presentinvention to determine the lifetime benefit payment and the ridercharge. In one embodiment of the present invention, the initial paymentbase value equals the initial premium.“Premium”: 100% of the dollar amount of the initial or subsequentpremium payments deposited into the contract before application of anysales charges or payment enhancements.“Withdrawal Request”: A request made by the relevant life to withdrawfunds during the “accumulation phase” of the contract. One type ofwithdrawal is a lifetime benefit payment. Any withdrawal that is inexcess of the lifetime benefit payment may: (i) decrease the contractvalue below the minimum contract value; (ii) decrease the payment basevalue; and (iii) decrease the guaranteed death benefit.“Lifetime Benefit Payment”: A benefit payment that is available untilthe death of the relevant life. The lifetime benefit payment may be paidyearly in one embodiment. The total lifetime benefit payment for theyear may also be distributed monthly, quarterly or any other definedperiod. Preferably, the lifetime benefit payment is only available ifthe covered life age is 60 (or other predetermined age) or older.Preferably, if the relevant life is age 59 (or other predetermined age)or younger, the LBP is equal to zero. Other age restrictions can also beutilized for the lifetime benefit payment. Preferably, the lifetimebenefit payment is determined by the following formula:

LBP=the greater of:

-   -   “the guaranteed lifetime benefit payment” (the payment base        value)×(the withdrawal percent); and    -   “the maximum lifetime benefit payment” (the present contract        value)×(the withdrawal percent).        It should be understood that in other embodiments of the present        invention, other formulas may be utilized for determining the        lifetime benefit payment.        “Contract Value”: The contract value (CV) is a numerical measure        of the relative worth of a variable annuity product during the        accumulation phase. The contract value is determined by adding        the amount of purchase payments made during the accumulation        phase, deducting management fees, deducting contract fees,        deducting optional rider fees and surrenders made by the owner,        and adjusting for the relative increase (or decrease) of the        investment option(s) chosen by the owner. It should be        understood that in other embodiments of the present invention,        other formulas may be utilized for determining the contract        value.        “Sub-account”: Variable account investments within the variable        annuity contract, such as mutual funds, stocks and bonds.        “Withdrawal”: Also known as a “surrender”, a relevant life may        withdraw up to the contract value at any time.        “Death Benefit”: The death benefit provision guarantees that        upon the death of the relevant life a death benefit (DB) is paid        to a beneficiary named in the contract that is equal to the        greater of the guaranteed death benefit or the contract value as        of the date that proof of death is received. It should be        understood that in other embodiments of the present invention,        other formulas may be utilized for determining the guaranteed        death benefit.

“AMF”: Annual Maintenance Fee.

“Annuity Commencement Date”: The annuity commencement date (ACD) is thedate upon which the contract enters the “annuitization phase”.

“Withdrawal Percent”: In one embodiment of the present invention, thewithdrawal percent (WP) is used to determine the amount of the lifetimebenefit payment. It should be understood that in other embodiments ofthe present invention, other formulas may be utilized for determiningthe lifetime benefit payment.“PB increase”: Payment Base increase.“Step-Up”: An increase to the payment base value that is available ifthe contract value increases because of favorable performance of theunderlying investments. Preferably, the step-up is guaranteed at apredetermined percentage.“High Water Mark”: A predetermined threshold. In one embodiment, thehigh water mark is equal to the previously highest contract value (minusthe rider fee) as determined at periodic time intervals.“Partial Surrender”: Partial surrender means the gross amount of thepartial surrender and will include any applicable contingent deferredsales charges.“Covered Life Change”: Any contractual change before ACD which causes achange in the covered life will result in a reset in the benefitsprovided under the rider and allows the issuing company to impose thefund allocation restrictions.“Annuity Contract”: The term annuity contract means a set of rules andother data that are reflected in a computer processing system foroperations of the annuity product.“Issue Rules”: The issuance of a contract may be subject to establishedrequirements known as issue rules.

The following detailed illustrative embodiment(s) is presented toprovide a more complete understanding of the invention. The specifictechniques, systems, and operating structures set forth to illustratethe principles and practice of the invention may be embodied in a widevariety of sizes, shapes, forms and modes, some of which may be quitedifferent from those in the disclosed embodiment. Consequently, thespecific structural and functional details disclosed herein areexemplary. They are deemed to afford the best embodiment for purposes ofdisclosure; but should not be construed as limiting the scope of theinvention.

Covered Life in Single and Joint/Spousal Election(s)

The covered life, or relevant life, may have a single life election orjoint/spousal continuation election as described more fully herein.

Single Life Election:

If a natural owner, the covered life is the owner and the joint owner(if any) on the contract or rider effective date. If a non-naturalowner—the covered life is the annuitant on the contract or ridereffective date. All age-contingent benefit provisions are based on theattained age of the oldest covered life.

Joint/Spousal Continuation Election:

If a natural owner—the covered life is both the spouses (as defined byFederal Law). All age-contingent benefit provisions are based on theattained age of the youngest covered life.

Issues Rules

Issue rules are set forth to provide a more complete understanding ofone illustrative embodiment of the present invention. It should beunderstood by those skilled in the art that these issue rules are setforth for illustrative purposes only and that other rules may beutilized. Accordingly, the issue rules set forth below should not beconstrued as limiting the scope of the invention.

The issue rules may include a maximum issue age. Benefit option 1 iswhere the riders are not available if any covered life or annuitant isage 81 (or other predetermined age) or greater on the rider effectivedate. For benefit option 2, these riders are not available if anycovered life or annuitant is age 76 (or other predetermined age) orgreater on the rider effective date. The rider may be elected oncontract issue or post-issue.

Single Life Election: No additional requirements

Joint/Spousal Continuation Election: (this May Also IncludeCo-Annuitants)

One of the following must apply:

-   -   If a natural owner purchases joint/spousal election, and adds a        spousal joint owner, then the owner can name anyone else as the        designated beneficiary because by contract disposition, the        joint owner will receive the death benefit.    -   If a natural owner purchases joint/spousal election, and does        not add a joint owner, then the owner must name their spouse as        the designated beneficiary.    -   If a non-natural owner purchases joint/spousal election, then        the annuitant's spouse must be the designated beneficiary.        A joint owner who is not the owner's spouse is not allowed.

Calculation of the Withdrawal Percent (WP)

The Withdrawal Percent (WP) is used to determine the amount of thelifetime benefit payment. The WP is determined at the later of: theattained age of the covered life on the most recent contract anniversaryprior to the first withdrawal, or the contract anniversary immediatelyfollowing the covered life's 60^(th) birthday (or other predeterminedage). Below is a brief summary of the WP for single life election andjoint/spousal continuation election.

Single Life Election: (Note: the following percentages and ages, if agesare in fact used, can vary)

5.0% for attained ages 60 to 64;

5.5% for attained ages 65 to 69;

6.0% for attained ages 70 to 74;

6.5% for attained ages 75 to 79;

7.0% for attained ages 80 and above.

Joint/Spousal Continuation Election:

4.5% for attained ages 60 to 64;

5.0% for attained ages 65 to 69;

5.5% for attained ages 70 to 74;

6.0% for attained ages 75 to 79;

6.5% for attained ages 80 and above.

Calculation of the Payment Base (PB)

The Payment Base (PB) (or more accurately payment base value) is theamount used to determine the lifetime benefit payment (LBP) and therider charge. A total partial surrender amount in a contract year thatexceeds the LBP by not more than $0.12 (the tolerance amount) will bedeemed not more than the LBP. This provision recognizes that owners maytake the LBP in installments over the year, and the amount ofinstallment may round the proportional distribution amount to the highercent. Therefore, owners intended to stay within the LBP may exceed it byonly a few cents.

The maximum PB is $5,000,000. If the rider is effective on the contractissue date, then the PB equals the X % of the initial premium. If therider is effective after the contract issue date, then the PB equals100% of the dollar amount of the contract value on the rider effectivedate, less any payment enhancements received in the last 12 months. Whensubsequent premium payments are received, the PB will be increased by100% of the dollar amount of the subsequent premium payment.

Whenever a partial surrender is made prior to the contract anniversaryimmediately following the covered life's 60^(th) birthday (or otherpredetermined age), the payment base is reduced for an adjustmentdefined below. The threshold is 5% single/4.5% joint/spousal multipliedby the greater of the payment base or contract value at the beginning ofthe contract year plus subsequent premiums prior to a partial surrender.For cumulative partial surrenders during each contract year that areequal to or less than the threshold, the adjustment is equal to thedollar amount of the partial surrender. For any partial surrender thatfirst causes cumulative partial surrenders during the contract year toexceed the threshold, the adjustment is the dollar amount of the partialsurrender that does not exceed the threshold. For the portion of thewithdrawal that exceeds the threshold, the adjustment is a factor. Thefactor is as follows:

1−(A/(B−C)) where

-   -   A=partial surrenders during the contract year in excess of the        threshold;    -   B=contract value immediately prior to the partial surrender; and    -   C=the threshold, less any prior partial surrenders during the        contract year. If C results in a negative number, C becomes        zero.        For partial surrenders during each contract year, where the sum        of prior partial surrenders are in excess of the threshold, the        adjustment is a factor. The factor is applied to the payment        base immediately before the surrender. The factor is as follows:

1−(A/B) where

-   -   A=the amount of the partial surrender; and    -   B=contract value immediately prior to the partial surrender.        Whenever a partial surrender is made on or after the contract        anniversary immediately following the covered life's 60^(th)        birthday (or other predetermined age), the PB will be equal to        the amount determined as follows:    -   If the total partial surrenders since the most recent contract        anniversary are equal to or less than the current lifetime        benefit payment (LBP), the PB is not reduced by the amount of        the partial surrender.    -   If the total partial surrenders since the most recent contract        anniversary are more than the current LBP, but all partial        surrenders were paid under the Automatic Income Required Minimum        Distribution (Al RMD), the PB is not reduced by the amount of        partial surrender.        For any partial surrender that first causes cumulative partial        surrenders during the contract year to exceed the current LBP,        and the RMD exception above does not apply, the adjustment is a        factor. The factor is as follows:

1−(A/(B−C)) where

-   -   A=partial surrenders during the contract year in excess of the        LBP;    -   B=contract value immediately prior to the partial surrender; and    -   C=the LBP, less any prior partial surrenders during the contract        year. If C results in a negative number, C becomes zero.        For additional partial surrender(s) in a contract year, where        the sum of all prior partial surrenders exceed the current LBP,        the PB will be reduced by applying a factor. The factor is as        follows:

1−(A/B) where

-   -   A=the amount of the partial surrender; and    -   B=contract value immediately prior to the partial surrender.

Benefit Increase Provision Benefit Option 1

The withdrawal percent will be set at the attained age of the firstwithdrawal and will not increase thereafter.

Benefit Option 2

The benefit increase is facilitated through an increase in the paymentbase. On every contract anniversary up to and including the contractanniversary immediately following the covered life's 80^(th) birthday(or other predetermined age), whether an increase in the PB isapplicable will be automatically determined. If an increase isapplicable, the PB will be automatically increased by the factor below,subject to a minimum of zero and a maximum of 10% (note: the percentagecould change or it could be a full step up (no limit)):

-   -   (contract value prior to rider charge taken on current        anniversary/maximum contract value)−1        -   where the maximum contract value equals the greater of (A)            or (B) below:        -   (A) the contract value on the rider effective date, plus            premiums received after the rider effective date; or        -   (B) the contract value on each subsequent contract            anniversary, excluding the current contract anniversary plus            premiums received after the contract anniversary date.            (Similar to MAV except that there is no adjustment for            withdrawals.)            The WP is locked in on the date of the first withdrawal.

Calculation of the Lifetime Benefit Payment

The Lifetime Benefit Payment (LBP) is available until the death of anycovered life or until the withdrawal benefit is revoked.

A total partial surrender amount in a contract year that exceeds the LBPby not more than $0.12 (the “tolerance amount”) will be deemed not morethan the LBP. This provision recognizes that owners may take the LBP ininstallments over the year, and the amount of installment may round theproportional distribution amount to the higher cent. Therefore, ownersintending to stay within the LBP may exceed it by only a few cents. Onthe rider effective date:

-   -   If the covered life is age 60 (or other predetermined age) or        older on the rider effective date, the LBP is equal to the        payment base multiplied by the WP for the covered life's        attained age.    -   If the covered life is age 59 (or other predetermined age) or        younger on the rider effective date, the LBP is equal to zero.

On any contract anniversary immediately following the covered life's60^(th) birthday (or other predetermined age), the LBP is equal to theWP multiplied by the greater of payment base or the contract value onthe anniversary for both the age-based and the market-based riders,single and spousal. The LBP can fluctuate year to year due to marketperformance, but will never be lower than the WP multiplied by the PB aslong as the covered life has reached the age of 60 (or otherpredetermined age). Also, if the account value on the anniversaryexceeds the PB, the LBP may decrease in future years but will never beless than the PB multiplied by the WP.

When a subsequent premium payment is made after the contract anniversaryimmediately following the covered life's 60^(th) Birthday (or otherpredetermined age), the LBP is equal to the greater of: (i) the WP, onthe most recent contract anniversary, multiplied by the greater of thePB or contract value immediately after the subsequent premium isreceived, or (ii) the prior LBP.

Whenever a partial surrender is made on or after the contractanniversary immediately following the covered life's 60^(th) birthday(or other predetermined age), if the PB is zero due to withdrawals, theLBP is equal to zero. During the deferral stage, subsequent premiums maybe made to re-establish the PB and the LBP. The LBP will be equal to theamount determined in either one as follows:

-   -   If the total partial surrenders since the most recent contract        anniversary are equal to or less than the current lifetime        benefit payment (LBP), the LBP is equal to the LBP immediately        prior to the partial surrender.    -   If the total partial surrenders since the most recent contract        anniversary are more than the current LBP, but all partial        surrenders were paid under the Automatic Income Required Minimum        Distribution (Al RMD), the provisions of above will apply.    -   If the total partial surrenders since the most recent contract        anniversary are more than the current LBP and the Al RMD        exception above does not apply, the LBP is reset to the WP on        the most recent contract anniversary multiplied by the greater        of the PB or contract value immediately after the partial        surrender.

The contract owner may request an amount less than, equal to, or greaterthan the lifetime benefit payment. Total partial surrenders taken duringa contract year on or after the contract anniversary immediatelyfollowing the covered life's 60^(th) birthday (or other predeterminedage) which exceed the LBP may reduce future LBP values and may reducethe PB. If the total amount requested by the contract owner during acontract year is less than the lifetime benefit payment, the excesscannot be carried over to increase future years' lifetime benefitpayments.

Contingent Deferred Sales Charge (CDSC)—Free Up to the Amount of the LBP

If the LBP exceeds the actual withdrawal amount (AWA) on the most recentcontract anniversary, any contingent deferred sales charge (CDSC) willbe waived up to the LBP amount.

Death Benefit Before Annuity Commencement Date

For both single and joint/spousal election, a death benefit may beavailable on the death of any owner or annuitant. For joint/spousalelection only, no death benefit will be available when a covered life isthe beneficiary, and the beneficiary dies. The death benefit provisionguarantees that upon death, a death benefit (DB) equal to the greater ofthe death benefit or the contract value will be paid as of the dateproof of death is received. The rider charge is not assessed on death.When proof of death is processed, the contract will go into suspensemode. No charges will apply during that period. The amount available tobe paid as a death benefit under the terms of the rider is a return ofthe premium adjusted for subsequent premium payments and partialsurrenders.

If the rider is effective on the contract issue date, then the DB equalsthe initial premium. If the rider is effective after the contract issuedate, then the DB equals 100% of the dollar amount of the contract valueon the rider effective date, less any bonus payments paid into thecontract by the company in the last 12 months. When a subsequent premiumpayment is received, the DB will be increased by 100% of the dollaramount of the subsequent premium payment.

If the withdrawal feature is revoked, all future withdrawals from thedeath benefit will be fully proportional as of the date it is revoked.

Whenever a partial surrender is made prior to the contract anniversaryimmediately following the covered life's 60^(th) birthday (or otherpredetermined age), the death benefit is reduced for an adjustmentdefined below. (For “threshold” definition, please see “Calculation ofthe Payment Base” at page 19). For cumulative partial surrenders duringeach contract year that are equal to or less than the threshold, theadjustment is the dollar amount of the partial surrender. For anypartial surrender that first causes cumulative partial surrenders duringthe contract year to exceed the threshold, the adjustment is the dollaramount of the partial surrender that does not exceed the threshold andthe adjustment for the remaining portion of the partial surrender is afactor. The factor is applied to the portion of the death benefit thatexceeds the threshold. The factor is as follows:

1−(A/(B−C)) where

-   -   A=partial surrenders during the contract year in excess of the        threshold;    -   B=contract value immediately prior to the partial surrender; and    -   C=the threshold less any prior partial surrenders during the        contract year. If C results in a negative number, C becomes        zero.        For partial surrenders during each contract year, where the sum        of the prior partial surrenders in the year are in excess of the        threshold, the adjustment is a factor. The factor is applied to        the adjusted death benefit immediately before the surrender. The        factor is as follows:

1−(A/B) where

-   -   A=the amount of the partial surrender; and    -   B=contract value immediately prior to the partial surrender.        Whenever a partial surrender is made on or after the contract        anniversary immediately following the covered life's 60^(th)        birthday (or other predetermined age), the DB will be equal to        the amount determined as follows:    -   If the total partial surrenders since the most recent contract        anniversary are equal to or less than the current lifetime        benefit payment (LBP), the DB becomes the DB immediately prior        to the partial surrender, less the amount of partial surrender,        less the amount of partial surrender paid out of the general        account of the company.    -   If the total partial surrenders since the most recent contract        anniversary are more than the current LBP, but all partial        surrenders were paid under the Automatic Income RMD (Al RMD),        the DB becomes the DB immediately prior to the partial        surrender, less the amount of partial surrender, less the amount        of partial surrender paid out of the general account of the        company.    -   If the total partial surrenders since the most recent contract        anniversary exceed the total current LBP and the Al RMD        exception does not apply, the adjustment is the dollar amount of        the partial surrender that does not exceed the LBP, and the        adjustment for the remaining portion of the partial surrender is        a factor. The factor is applied to the portion of the death        benefit that exceeds the LBP. The factor is as follows:

1−(A/(B−C)) where

-   -   A=partial surrenders during the contract year in excess of the        LBP;    -   B=contract value immediately prior to the partial surrender; and    -   C=LBP less any prior partial surrenders during the contract        year. If C results in a negative number, C=zero.        For partial surrenders during each contract year, where the sum        of the prior partial surrenders in the year are in excess of the        current LBP, the adjustment is a factor. The factor for        adjustments for partial surrenders for the death benefit is        applied to the adjusted death benefit immediately before the        surrender. The factor is as follows:

1−(A/B) where

-   -   A=the amount of the partial surrender; and    -   B=contract value immediately prior to the partial surrender.

Contract Value (CV) Reduces Below Minimum Contract Value (MCV) Rules

The minimum contract value (MCV) rules are an optional feature of thepresent invention and do not apply to the preferred embodiments. If theMCV rules are selected to be applied, then the following rules are used.The MCV is defined as 20% or some other percentage of the relevantlife's payment base on the date of a withdrawal request. Lifetimebenefit payments (LBP) cannot reduce the contract value (CV) below thisminimum threshold. Only sub-account performance and withdrawals inexcess of the LBP can decrease the CV below the MCV.

If total partial surrenders since the most recent contract anniversaryare less than or equal to the difference between the CV and the MCV, theCV will be reduced by the total partial surrender. If the CV at the timeof a partial surrender is less than or equal to the MCV, the CV will notbe decreased for the partial surrender. The requested partial surrenderwill be paid out of the general account assets of the company. If the CVimmediately before the partial surrender is greater than the MCV, butwould drop below the MCV after the partial surrender, the CV will beliquidated to pay the LBP only to the extent it would equal the MCV. Theremaining portion of the LBP that is not funded by the CV will be paidout of the general account assets of the company.

Covered Life Change(s)

A covered life change is any contractual change before the ACD whichcauses a change (defined infra) in the covered life that will result ina reset in the benefits provided under the rider and allows theimposition of the fund allocation restrictions. Covered life changes inthe first 6 months of the contract issue date (or other time period)will not cause a change in the DB or PB. However, the WP and LBP maychange based on the attained age of the covered life after the coveredlife change.

If the covered life is changed and a withdrawal has been taken, bothwithin the first 6 months from contract issue date (or other timeperiod), then the LBP and WP will be calculated at the time of thecovered life change and will be based on the new covered life's attainedage on the rider effective date. If the covered life is changed and awithdrawal has not been taken, both within the first 6 months fromcontract issue date (or other time period), then the LBP and WP will becalculated upon the first withdrawal as follows:

-   -   If the first withdrawal is after the first 6 months and before        the first contract anniversary (or other time period), then the        LBP and WP will be based on the new covered life's attained age        on the rider effective date.    -   If the first withdrawal occurs after the first contract        anniversary, then the LBP and WP will be calculated based on the        new covered life's attained age on the most recently attained        contract anniversary.    -   If the oldest covered life after the change is greater than the        age limitation of the rider at the time of the change, then the        rider will terminate and the death benefit will be equal to        contract value.

Single Life Election:

Covered life changes after the first 6 months of contract issue datewill cause a reset in the benefits listed below.

If the oldest covered life after the change is equal to or less than agelimitation of the rider at the time of the change, then either belowwill automatically apply.

-   -   If the rider is not currently available for sale, the withdrawal        feature of the rider will be revoked.        -   The existing rider will continue with respect to the death            benefit only.        -   The death benefit will be recalculated to the lesser of            contract value or the DB on the effective date of the            covered life change.        -   The rider charge is assessed on the revocation date, and            then will no longer be assessed.    -   If the rider is currently available for sale, the existing rider        will continue with respect to all benefits, at the current rider        charge.        -   The PB will be reset to the minimum of the contract value or            the PB on the date of the change.        -   The DB will be reset to the minimum of the contract value or            the DB on the date of the change.        -   The WP and LBP will be recalculated on the date of the            change and will be based on:            -   If withdrawals are taken prior to the first contract                anniversary, the new covered life's attained age on the                rider effective date will be used.            -   If withdrawals are taken after the first contract                anniversary, the new covered life's attained age on the                contract anniversary prior to the first withdrawal will                be used.        -   The maximum contract value will be recalculated to equal the            contact value on the date of the covered life change.

If the oldest covered life after the change is greater than the agelimitation of the rider at the time of the change, then the rider willterminate, and the death benefit will be equal to contract value. If therider is no longer available for sale and the issue age of the rider hasbeen changed (to be determined on a non-discriminatory basis), and acovered life change occurs, and they exceed that newly determined agelimitation, then the rider will terminate, and the death benefit will beequal to contract value.

Joint/Spousal Continuation Election:

After the first 6 months of contract issue date, if the owner andowner's spouse are no longer married for reasons other than death, thencovered life changes may occur as follows:

-   -   If surrenders have not been taken from the contract, then the        PB, the DB and the MCV remain the same; the covered life will be        reset and the WP scale will be based on the youngest covered        life as of the date of the change. Owner may remove owner's        spouse as a covered life. Owner may replace owner's original        spouse with owner's new spouse. These changes do not have to        happen on the same day.    -   If surrenders have been taken from the contract, then owner may        remove owner's spouse. The PB, the DB and the MCV remain the        same; the WP scale will be based on the attained age of the        remaining covered life as of the date of the change. Any changes        other than removing the spouse will follow the rules below.    -   If the oldest covered life after the change is greater (older)        than the age limitation of the rider at the time of the change,        then the rider will terminate. The death benefit will be equal        to the contract value.    -   If any other contractual change causes a change in the covered        life, then either will automatically apply:        -   If the oldest covered life after the change is equal to or            less (younger) than the age limitation of the rider at the            time of the change, then the withdrawal feature of this            rider will be revoked. The existing rider will continue with            respect to the death benefit only. The rider charge is            assessed on the revocation date, and then will no longer be            assessed.        -   If the oldest covered life after the change is greater            (older) than the age limitation of the rider at the time of            the change, then the rider will terminate. The death benefit            will be equal to the contract value.    -   If the rider is no longer available for sale and the issue age        of the rider is changed (to be determined on a        non-discriminatory basis), and a covered life change occurs, and        they exceed that newly determined age limitation, then the rider        will terminate, and the death benefit will be equal to the        contract value.    -   If the spouse dies and is the primary beneficiary and the        covered life, then the owner may remove the spouse from the        contract. The PB, DB and the maximum contract value will remain        the same. The WP will be recalculated as follows:        -   If there has been a partial surrender since the rider            effective date, then WP will remain at the current            percentage.        -   If there has not been a partial surrender since the rider            effective date, then WP will be based on the attained age of            the remaining covered life on the contract anniversary prior            to the first surrender.

Spousal Continuation Single Life Election:

In the event the contract owner dies and spousal continuation iselected, the contract value will increase to the DB value (the greaterof the contract value and the DB). The covered life will bere-determined on the date of the continuation. If the covered life isless than age 81 (or other predetermined age) at the time of thecontinuation, then either of the below will automatically apply:

-   -   If the rider is not currently available for sale, the withdrawal        feature of the rider will be revoked. The existing rider will        continue with respect to the death benefit only. The rider        charge is not assessed on the revocation date, and then is no        longer assessed.    -   If the rider is currently available for sale, the existing rider        will continue with respect to all benefits at the current rider        charge.        The payment base and the death benefit will be set equal to the        contract value on the continuation date. The LBP and WP will be        recalculated on the continuation date. The WP will be        recalculated based on the age of the oldest covered life on the        effective date of the spousal continuation. If the WP had        previously been locked in, then it will become unlocked and can        change based on the next withdrawal. The maximum contract value        will be set to the contract value on the continuation date. If        the covered life is greater than or equal to age 81 (or other        predetermined age) at the time of the continuation, the rider        will terminate. The death benefit will be equal to the contract        value.

Joint/Spousal Continuation Election:

In the event that the contract owner dies and spousal continuation iselected, the contract value will increase to the DB value (the greaterof the contract value and the DB). The spouse may do the following.

The spouse may elect to continue the existing rider with respect to allbenefits, at the current contract rider charge. The payment base will beequal to the greater of contract value or payment base on thecontinuation date. The LBP will be recalculated to equal the withdrawalpercent multiplied by the greater of contract value or payment base onthe continuation date. The maximum contract value will be the greater ofthe payment base or the contract value on the continuation date. The DBwill be equal to the bumped up contract value on the continuation date.

The WP recalculation rule is as follows:

-   -   The WP will remain at the current percentage if there has been a        partial surrender since the rider effective date.    -   If there has not been a partial surrender, the WP will be based        on the attained age of the remaining covered life on the        contract anniversary prior to the first surrender/withdrawal.

The contract owner cannot name a new owner on the contract. The contractowner can name a new beneficiary on the contract. Any new beneficiaryadded to the contract will not be taken into consideration as a coveredlife. The rider will terminate upon the death of the surviving coveredlife.

Alternatively, the spouse can elect to continue the contract and revokethe withdrawal feature of the rider. The charge is assessed onrevocation date, and then is no longer assessed.

The covered life will be re-determined on the date of the continuationdate for death benefit purposes. If the covered life is greater than theage limitation at the time of continuation, the rider will terminate.The death benefit will be equal to contract value.

Effect of Death of the Owner or the Annuitant Before the AnnuityCommencement Date

The following tables describe the effect of death of the owner or theannuitant before the annuity commencement date for the single lifeelection and the joint/spousal continuation election.

TABLE 1 Single Life Election: If the Deceased is And . . . And . . .Then the . . . Contract There is a The annuitant is living Jointcontract owner Owner surviving or deceased receives the DB, contractowner rider terminates Contract There is no The annuitant is livingRider terminates, Owner surviving or deceased designated contract ownerbeneficiary receives DB Contract There is no The annuitant is livingRider terminates, Owner surviving or deceased estate receives DBcontract owner or beneficiary Annuitant Contract owner There is nocontingent Contract continues, is living annuitant and the no DB ispaid, rider contract owner continues becomes the contingent annuitantAnnuitant Contract owner There is no contingent Rider terminates, isliving annuitant and the contract owner contract owner waives receivesDB their right become the contingent annuitant Annuitant Contract ownerContingent annuitant is Contingent is living living annuitant becomesannuitant and the contract and rider continues Annuitant Contract ownerThere is no contingent Contract owner is non-natural annuitant receivesDB, rider person terminates

TABLE 2 Joint/Spousal Continuation Election: If the Deceased is . . .And . . . And . . . Then the . . . Contract There is a The annuitant isliving The surviving contract Owner surviving or deceased ownercontinues the contract contract and rider, the owner contract valueincreases to the death benefit value. Contract There is no The annuitantis living If the spouse is the Owner surviving or deceased sole primarycontract beneficiary, follow owner spousal continuation rules for jointlife elections Contract There is no The annuitant is living Riderterminates, Owner surviving or deceased estate receives DB contractowner or beneficiary Annuitant Contract If the spouse is the owner issole primary non-natural beneficiary, follow person spousal continuationrules for joint life elections Annuitant The owner is There is a livingThe rider continues; living contingent annuitant upon the death of thelast surviving covered life, the rider will terminate.

Contingent Annuitant Becomes Annuitant

If the annuitant dies where there is a contingent annuitant (who isdifferent from the owner/annuitant), then the rider continues and allprovisions of the rider remain the same, there are no resets nor DBspaid. Upon the death of the last surviving covered life, a DB is paid tothe beneficiary, and the rider terminates.

Effect of Death After the Annuity Commencement Date.

The following tables describe the effect of death after the annuitycommencement date for single life election and joint/spousalcontinuation election.

TABLE 3 Single Life Election: If the Deceased is And . . . And . . .Then the . . . Annuitant The annuitant Fixed lifetime The lifetime isalso the and period contingency ceases. contract owner certain iselected The remaining DB is paid under period certain.

TABLE 4 Joint/Spousal Continuation Election: If the Deceased is . . .And . . . And . . . Then the . . . Annuitant The annuitant is also Fixedlifetime The lifetime benefit the contract owner, and period ceases. Theand there is no certain is remaining DB is surviving joint elected paidunder period annuitant certain. Annuitant The annuitant is also Fixedjoint Lifetime benefit the contract owner, land survivor continues untiland there is a lifetime and death of last surviving joint period certainsurviving annuitant annuitant is elected

Fund Allocation Restrictions

Fund allocation and investment in any investment option may berestricted in the event of a change of covered life after six months. Ifthe investment option restriction is imposed, a contract owner (may)have the following options. The contract owner may (i) reallocate allexisting money and all new premium to a non-restricted investmentoption, an available asset allocation program, or fund-of-fundinvestment option from time to time, or (ii) the contract owner mayrevoke the withdrawal feature. If the restrictions are violated, thewithdrawal feature will be revoked. The death benefit continues as isupon the date of revocation.

Aggregation.

For purposes of determining the PB under the rider, one or more deferredvariable annuity contracts issued to the owner with the rider attachedin the same calendar year may be treated as one contract. If thecontracts are aggregated, the period over which withdrawals are measuredagainst the payment benefit will change.

The effective date of the election until the end of the calendar yearwill be treated as a contract year for the purposes of the LBP limit. Apro rata rider charge will be taken at the end of that calendar year. Aslong as total withdrawals in that period do not exceed the LBP, thewithdrawals will not necessitate a reset.

In future calendar years, the LBP limits will be aggregated and will beon a calendar year basis. In other words, withdrawals under allaggregated contracts in a calendar year will be compared against thecombined LBP limits for the aggregated contracts. If withdrawals exceedthose combined limits, the aggregate PB will be set to the combinedcontract values of the aggregated contracts. The LBP will then equal thewithdrawal percent multiplied by the new PB.

If withdrawals do not exceed those combined limits, each withdrawal willreduce the PB dollar for dollar. The withdrawal benefits relating to thecontract value reaching zero will not apply until the contract value ofall aggregated contracts reaches zero. The rider charge will be taken atthe end of each calendar year. It will be deducted pro rata from all ofthe sub-accounts and fixed accounts of the aggregated contracts. If thecontract values of all aggregated contracts are reduced below theminimum account rules in effect, the annuity options as defined earlierin this specification will be offered. The options will pay the combinedLBP.

Annuity Commencement Date.

If the annuity reaches the maximum ACD, which is the later of the10^(th) contract anniversary and the date the annuitant reaches age 90,the contract must be annuitized unless it is agreed upon to extend theACD. In this circumstance, the contract may be annuitized under standardannuitization rules, but under no circumstances will the amount payablebe less than your LBP, provided that the certain period does not exceedthe death benefit remaining at the ACD divided by the LBP.

Single Life Election:

A fixed lifetime and period certain payout will be issued. The lifetimeportion will be based on the covered life determined at the ACD. Thecovered life is the annuitant for this payout option. If there is morethan one covered life then the lifetime portion will be based on bothcovered lives. The covered lives will be the annuitant and jointannuitant for this payout option. The lifetime portion will terminate onthe first death of the two. The minimum amount paid under this annuityoption will at least equal the remaining DB under this rider.

If the oldest annuitant is age 59 (or other predetermined age) oryounger, the date the payments begin will be automatically deferreduntil the oldest annuitant attains age 60 (or other predetermined age)and is eligible to receive payments in a fixed dollar amount until thelater of the death of any annuitant or a minimum number of years. If theannuitant(s) are alive and age 60 (or other predetermined age) or older,payments will be received in a fixed dollar amount until the later ofthe death of any annuitant or a minimum number of years. The minimumnumber of years that payments will be made is equal to the remaining DBunder this rider divided by the product of the payment base on the ACDmultiplied by the greater of the WP and 5% single (4½% joint/spousal).

${Single}\mspace{14mu} {Election}\text{:}\mspace{14mu} \frac{DB}{{PB} \times {{Max}\left( {{WP},{5\%}} \right)}}$${Joint}\text{/}{Spousal}\mspace{14mu} {Election}\text{:}\mspace{14mu} \frac{DB}{{PB} \times {{Max}\left( {{WP},{4\frac{1}{2}\%}} \right)}}$

This annualized amount will be paid over the greater of the minimumnumber of years, or until the death of any annuitant, in the frequencythat is elected. The frequencies will be among those offered by theissuing company at that time but will be no less frequently thanannually. If, at the death of any annuitant, payments have been made forless than the minimum number of years, the remaining scheduled periodcertain payments will be made to the beneficiary. A lump sum option isnot available.

Joint/Spousal Continuation Election:

The minimum amount paid to the annuitant under this annuity option willat least equal the DB under the rider. If the younger annuitant is aliveand age 59 (or other predetermined age) or younger, the date thatpayments begin will be automatically deferred until the youngerannuitant attains age 60 (or other predetermined age) and is eligible toreceive payments in a fixed dollar amount until the death of the lastsurviving annuitant or a minimum number of years. If the annuitants arealive and the younger annuitant is age 60 or older (or otherpredetermined age), payments will be received in a fixed dollar amountuntil the death of the last surviving annuitant or a minimum number ofyears. The minimum number of years that payments will be made is equalto the remaining DB under this rider divided by the LBP atannuitization.

This annualized amount will be paid over the greater of the minimumnumber of years, or until the death of the last surviving annuitant, inthe frequency that annuitant elects. The frequencies will be among thoseoffered at that time but will be no less frequently than annually. If,at the death of the last surviving annuitant, payments have been madefor less than the minimum number of years, the remaining scheduledperiod certain payments will be made to the beneficiary. A lump sumoption is not available. If both spouses are alive, a fixed joint andsurvivor lifetime and period certain payout will be issued. The coveredlife and covered life's spouse will be the annuitant and joint annuitantfor this payout option. The lifetime benefit will terminate on the lastdeath of the two. If one spouse is alive, owner will be issued a fixedlifetime and period certain payout. The lifetime portion will be basedon the covered life. The covered life is the annuitant for this payoutoption. The lifetime benefit will terminate on the last death of thecovered life.

Revoking the Withdrawal Feature Benefit Option 1

At any time following the earlier of spousal continuation or fifthanniversary of the rider effective date, the contract owner may elect torevoke the withdrawal feature of the rider. The payment base will go tozero and the withdrawal percent will go to zero, and LBP will go tozero.

On the date the withdrawal feature is revoked, a pro rata share of therider charge is equal to the rider charge percentage multiplied by thePB, multiplied by the number days since the last charge was assessed,divided by 365. The rider charge will be assessed on the revocationdate, and then will no longer be assessed. The death benefit continuesas is upon the date of the revocation. No other living benefit may beelected upon the revocation of the withdrawal feature.

Benefit Option 2

The contract owner can not elect to revoke the withdrawal feature.However, the withdrawal feature can be revoked in certain circumstances.See specific sections on ownership and spousal continuation.

Additional Annuity Contract(s) Rules

Additional terms of the contract(s) or rider(s) include the following.The benefits under the contract cannot be assigned. If the free lookprovision under the contract is exercised, the rider will terminate. Theemployee gross-up is not considered premium for purposes of the paymentbase and death benefit. Payment enhancements are not considered premiumfor purposes of the payment base and death benefit. Front-end loads arenot taken from the premium for purposes of the payment base and deathbenefit.

Subject to state approval, a rider will be made available on allcurrently available products issued on or after the date the rider islaunched for sale in the state of issue. This does not imply post-issueelection. Post-issue election will be determined on an as needed basis.See product requirements for a complete list.

Prior company approval is required on all subsequent premium paymentsreceived after the first 12 months. Any subsequent premium payment(s)which brings the total cumulative subsequent premiums in excess of$100,000 will not be accepted without prior approval. Paymentenhancements and employee gross-up are not to be included in premiumtotal.

Where post-issue election occurs, if the rider effective date is afterthe contract issue date, then the period between the rider effectivedate and the next contract anniversary will constitute a contract year.

It should be understood that as used herein the term “periodically” incertain aspects may refer to only being performed once. In otheraspects, “periodically” may refer to steps being performed more thanonce as described herein.

Turning now to the figures, FIG. 1 illustrates the manner in which a newannuity contract application is processed. The new applicationprocessing routine starts (block 102) when an application is completed.The annuity contract application and initial premium are received by theinsurance company (block 104). The annuity contract is then establishedthrough the contract establishing routine (block 106) as furtherdescribed in FIG. 2. After the annuity contract is established, theaccount value is then set up through the account value set routine(block 108), via the computer systems, as further specified in FIG. 3.Thereafter customer communication is established through the customercommunication routine (block 110) as further specified in FIG. 4. Theapplication processing routine ends at (block 112).

FIG. 2 is a flow chart that illustrates in more detail the manner inwhich an annuity contract is established. The annuity contractestablishing routine starts at (block 202). After receiving the annuitycontract application, customer demographics are determined (block 204).The customer demographics and other data from the annuity contractapplication are transmitted to the insurance company by any suitablemeans, such as electronic transmission, facsimile transmission,telephonic transmission, and the like. The customer demographics may bescanned in or electronically entered into the computer system by theinsurance company after the demographic data is determined. Suchdemographic information may include age, gender, date of birth, socialsecurity number, address, marital status, and the like. The customerdemographics may be used for a variety of purposes, such asidentification purposes or to locate a relevant life by searchinghis/her social security number. The customer demographics are also usedwhen determining and/or calculating a variety of factors that arerelated to the annuity contract, such as benefit amount calculations,tax considerations, and the like. The types of customer demographicsthat are determined are generally related to the type of annuitycontract application that is filled out by the relevant life. Thespecific product election is determined (block 206). For example, thespecific product may be elected from a group of different variableannuity products which each have different characteristics including thecosts and fees as well as the liquidity features associated therewith.The election of optional riders is determined (block 208). For example,the optional riders may be elected from a group of different riderswhich each have various guaranteed withdrawal features. The election ofinvestment options is determined (block 210). For example, theinvestment options include money market funds, bond funds, stock funds,and the like. The beneficiary is elected (block 212). In one aspect,this is the person who will collect the death benefits, if any. Thesource of the premium is determined (block 214). For example, the sourceof the premium may come from the relevant life's personal funds or maycome from another annuity in the form of a transfer. It should beunderstood that the steps taken for establishing the contract mayproceed in various orders and that the order shown in FIG. 2 is forillustrative purposes only and is only one embodiment of said steps. Thecontract establishing routine ends at (block 216).

FIG. 3 is a flow chart that illustrates in more detail the manner inwhich an account value is set up. The account value set up routinestarts at (block 302). The funds are received (block 304). For example,the funds may be received via electronic transfer from a bank account orfrom another variable annuity holder. The funds are then allocated basedon investment elections (block 306). For example, the allocations can beaccomplished through a computerized system according to the investmentelections by the relevant life. Unit values are established for theannuity contract (block 308). For example, based on the performance ofthe underlying investment elections, unit values are established,preferably on a daily basis, for use in determining the resulting impacton the relevant life's annuity contract based on their specific fundallocations. For example the number of units that are applied to eachannuity contract is different for each relevant life based on the numberof units held within the annuity contract. It should be understood thatthe steps taken for setting up the account value may proceed in variousorders and that the order shown in FIG. 3 is for illustrative purposesonly and is only one embodiment of said steps. The account value set uproutine ends at (block 310).

FIG. 4 is a flow chart that illustrates in more detail the manner inwhich customer communication is established. The customer communicationroutine starts at (block 402). Communications with the customer may beaccomplished via email, facsimile, letter, telephone, and the like.Communication with the customer in one aspect relates to the issuing ofthe contract (block 404). Communication with the customer in one aspectrelates to the relevant confirmation of the previous contract issuancecommunication (block 406). Any regulatory-imposed communication with theclient is accomplished (block 408). It should be understood that thesteps taken for establishing customer communication may proceed invarious orders and that the order shown in FIG. 4 is for illustrativepurposes only and is only one embodiment of said steps. The customercommunication routine ends at (block 410).

FIG. 5 is a flow chart illustrating the appropriate steps after awithdrawal is requested. The withdrawal processing routine starts at(block 502). A withdrawal is first requested by the relevant life at(block 504). The withdrawal is then processed according to the contractrules (block 506). The contract rules are embedded in a computer systemor the like and vary according to the type of annuity contract. Forexample, in certain embodiments, a requested withdrawal amount by therelevant life may be limited by the contract rules to a specificwithdrawal percent that is applied by the computer system, and whereinthe contract rules specify the withdrawal percent according to the ageof the relevant life or the number of years since the contract wasestablished. Therefore, the contract rules govern the data flow in thecomputer system. The contract rules are administratively built into thecomputer system to obviate the need for manual intervention by theinsurance company. The account value is reduced according to thecontract rules (block 508). The death benefit is reduced according tothe contract rules (block 510). The payment base is adjusted accordingto the contract rules (block 512). The check or other form of payment isissued (block 516). The appropriate tax forms are generated at year end(block 518). It should be understood that the steps taken for processingwithdrawals may proceed in various orders and that the order shown inFIG. 5 is for illustrative purposes only and is only one embodiment ofsaid steps. The withdrawal processing routine ends at (block 520).

FIG. 6 is a flow chart illustrating a preferred embodiment of thepresent invention comprising a data processing method for administeringa deferred variable annuity contract. It should be understood that theorder of the successive method steps is shown for the sake ofillustrating but one example and that the order of method steps canproceed in any variety of order. In one embodiment of the presentinvention, the invention comprises a data processing method foradministering a deferred variable annuity contract for a relevant life,the annuity contract having a payment base value, a contract value, andlifetime benefit payments. The present method begins at step 600. Thepresent method determines a payment base for said annuity contract(block 602) that is a function of the previous premium payments andwithdrawals by the relevant life. The present method determines awithdrawal percent for said annuity contract (block 604). If requestedby the relevant life, the present method periodically accepts premiumpayments from the relevant life (block 606) which increase the paymentbase and the contract value.

If requested by the relevant life and the covered life is older than apredetermined age (i.e. 60 years old), the present method periodicallycalculates a guaranteed lifetime benefit payment for the relevant life(block 608) which decreases the contract value. If requested by therelevant life, the present method periodically calculates a withdrawalpayment (block 610)—that is in excess of the lifetime benefitpayment—for the relevant life which decreases each of: the contractvalue and the payment base. It should be understood that several of themethod steps of the present invention (for example blocks 602 and 604)require a computer to use the method of the present invention; that isto say the calculations and appropriate data records must beaccomplished by a computer. For example, in one embodiment of thepresent invention, the payment base is related to premium payments bythe relevant life. A computer receives the payments and processes theappropriate calculations. In one embodiment, the lifetime benefitpayment is dependent on a pre-selected withdrawal percent. Preferably,the withdrawal percent is based on the age of the relevant life at thetime of the first requested lifetime benefit payment. The annuitycommencement date is established according to pre-established rules,subject to certain restrictions. The initial guaranteed death benefitamount is determined by calculations according to the present invention.Preferably, the initial guaranteed death benefit amount is establishedfor calculation purposes. In a preferred embodiment, the initialguaranteed death benefit amount is equal to the payment base. Theadministration of the deferred variable annuity contract ends at (block612).

Referring next to FIG. 7, depicted is a preferred embodiment of a systemon which the methods of the present invention may be implemented. In oneexample of the preferred embodiment, the insurance contract generatingsystem 714 would generally be used by an insurance provider 702, howeverthe system may be operated by any individual or organization offering aninsurance product as outlined in the present specification withoutdeparting from the spirit of the present invention. System 714 may beimplemented in many different ways such as part of a single standaloneserver or as a network server or servers which may be distributed acrossmultiple computing systems and architectures. Preferably, the centralprocessing computer or network server includes at least one controlleror central processing unit (CPU or processor), at least onecommunication port or hub, at least one random access memory (RAM), atleast one read-only memory (ROM) and one or more databases or datastorage devices. All of these later elements are in communication withthe CPU to facilitate the operation of the network server.

The network server may also be configured in a distributed architecture,wherein the server components or modules are housed in separate units orlocations. Each of the modules described may be implemented as singleservers or one or more or all of the modules may be incorporated into asingle server. These servers will perform primary processing functionsand contain at a minimum, a RAM, a ROM, and a general controller orprocessor. In such an embodiment, each server is connected to acommunications hub or port that serves as a primary communication linkwith other servers, clients or user computers and other related devices.The communications hub or port may have minimal processing capabilityitself, serving primarily as a communications router. A variety ofcommunications protocols may be part of the system, including but notlimited to: Ethernet, SAP, SAS™, ATP, Bluetooth, GSM and TCP/IP.

In the preferred embodiment, all of the modules described herein areoperably inter-connected via a central communications bus 738. Thecommunications bus 738 is able to receive information from each of themodules, as well as to transmit information from one module to another.The insurance contract generating system 714 further includes a displaymodule 704, and a generating module 706. The generating module is usedfor generating an insurance contract, wherein the insurance contractprovides coverage to an individual or group for at least one eventdefined in the insurance contract.

The insurance contract generating system 714 additionally includes apayment module 708 for making payments to an insured individual or groupfor a predetermined period of time as defined by the deferred annuityinsurance contract.

The system further comprises a beneficiary module 710 for choosing abeneficiary to receive payments from the insurance provider in theinstance of an insured individual's death. Furthermore, the systemcomprises a dependent module 712 for offering an insurance contractstructured according to the methods of the present invention todependents of an individual eligible for the insurance contractdescribed herein.

Additionally, the insurance contract generating system 714 includes: astorage drive 716 for receiving data stored on a storage disc, aprocessing module 718 for processing digital data received by andcontained in the insurance contract generating system 714, acommunication module 720 for bi-directional communication with externaland telecommunications systems, a data storage module 722 for storingand managing digital information, a text data input module 724 forinputting data in the form of text, and a data input module 726 forconverting to digital format documents and images and inputting theminto the insurance contract generating system 714.

Finally, the insurance contract generating system 714 includes: an audiodata input module 728 for receiving and inputting audio information, anaudio data output module 730 for outputting data in audio format (i.e.recorded speech, synthetically generated speech from digital text, etc),a memory module 732 for temporarily storing information as it is beingprocessed by the processing module 718, a universal serial bus interfacemodule 734 for receiving and transmitting data to and from devicescapable of establishing a universal serial bus connection, and a digitaldata input interface module 736 for receiving data contained in digitalstorage devices.

Data storage device may include a hard magnetic disk drive, tape,optical storage units, CD-ROM drives, or flash memory. Such data storagedevices generally contain databases used in processing transactionsand/or calculations in accordance with the present invention. In oneembodiment, the database software creates and manages these databases.Insurance-related calculations and/or algorithms of the presentinvention are stored in storage device and executed by the CPU.

The data storage device may also store, for example, (i) a program(e.g., computer program code and/or a computer program product) adaptedto direct the processor in accordance with the present invention, andparticularly in accordance with the processes described in detailhereinafter with regard to the controller; (ii) a database adapted tostore information that may be utilized to store information required bythe program. The database includes multiple records, and each recordincludes fields that are specific to the present invention such asinterest rates, contract value, payment base value, step up percent,premiums, subscribers, payouts, claims, etc.

The program may be stored, for example, in a compressed, an uncompiledand/or an encrypted format, and may include computer program code. Theinstructions of the program may be read into a main memory of theprocessor from a computer-readable medium other than the data storagedevice, such as from a ROM or from a RAM. While execution of sequencesof instructions in the program causes the processor to perform theprocess steps described herein, hard-wired circuitry may be used inplace of, or in combination with, software instructions forimplementation of the processes of the present invention. Thus,embodiments of the present invention are not limited to any specificcombination of hardware and software.

Suitable computer program code may be provided for performing numerousfunctions such as providing a deferred annuity insurance contract to anindividual, generating a deferred annuity insurance contract, and makingpayments to the individual as defined in the deferred annuity insurancecontract. The functions described above are merely exemplary and shouldnot be considered exhaustive of the type of function, which may beperformed by the computer program code of the present inventions.

The computer program code required to implement the above functions (andthe other functions described herein) can be developed by a person ofordinary skill in the art, and is not described in detail herein.

The term “computer-readable medium” as used herein refers to any mediumthat provides or participates in providing instructions to the processorof the computing device (or any other processor of a device describedherein) for execution. Such a medium may take many forms, including butnot limited to, non-volatile media, volatile media, and transmissionmedia. Non-volatile media include, for example, optical or magneticdisks, such as memory. Volatile media include dynamic random accessmemory (DRAM), which typically constitutes the main memory. Common formsof computer-readable media include, for example, a floppy disk, aflexible disk, hard disk, magnetic tape, any other magnetic medium, aCD-ROM, DVD, any other optical medium, punch cards, paper tape, anyother physical medium with patterns of holes, a RAM, a PROM, an EPROM orEEPROM (electronically erasable programmable read-only memory), aFLASH-EEPROM, any other memory chip or cartridge, a carrier wave asdescribed hereinafter, or any other medium from which a computer canread.

Various forms of computer readable media may be involved in carrying oneor more sequences of one or more instructions to the processor (or anyother processor of a device described herein) for execution. Forexample, the instructions may initially be borne on a magnetic disk of aremote computer. The remote computer can load the instructions into itsdynamic memory and send the instructions over an Ethernet connection,cable line, or even telephone line using a modem. A communicationsdevice local to a computing device (or, e.g., a server) can receive thedata on the respective communications line and place the data on asystem bus for the processor. The system bus carries the data to mainmemory, from which the processor retrieves and executes theinstructions. The instructions received by main memory may optionally bestored in memory either before or after execution by the processor. Inaddition, instructions may be received via a communication port aselectrical, electromagnetic or optical signals, which are exemplaryforms of wireless communications or data streams that carry varioustypes of information.

Servers of the present invention may also interact and/or control one ormore user devices or terminals. The user device or terminal may includeany one or a combination of a personal computer, a mouse, a keyboard, acomputer display, a touch screen, LCD, voice recognition software, orother generally represented by input/output devices required toimplement the above functionality. The program also may include programelements such as an operating system, a database management system and“device drivers” that allow the processor to interface with computerperipheral devices (e.g., a video display, a keyboard, a computer mouse,etc).

For example, a user provides instructions for the amount of the livingbenefit payment that is requested. It should be understood that the usermay communicate with the computing system directly or indirectly throughanother party, such as the insurance provider 702. In the event the usercommunicates with an insurance provider 702, the insurance provider 702than receives and transfers information, to and from the insurancecontract generating system 714 via the text data input module 724, audiodata input module 728, audio data output module 730 and the displaymodule 704. As used herein the data storage module 722 is also referredto as a storage device. The processing module 718 is contained withinthe insurance contract generating system 714, which is coupled to thestorage device, the storage device stores instructions that are utilizedby the processor. The instructions comprise: (i) an instruction fordetermining a present payment base; (ii) an instruction for determininga present contract value; (iii) an instruction for determining awithdrawal percent; and (iv) an instruction for calculating a lifetimebenefit payment; wherein the lifetime benefit payment withdrawal isdetermined according to the following formula:

LBP withdrawal=the greater of:

-   -   “the guaranteed lifetime benefit payment”−(the present payment        base)×(the withdrawal percent); and    -   “the maximum lifetime benefit payment”−(the present contract        value)×(the withdrawal percent).

FIG. 8 shows a table 800 illustrating exemplary lifetime benefit paymentvalues 806, which are illustrated under “Pmt Base” column 812 as afunction of time for annuities associated with various step-ups 804,which are illustrated in “step-up %” column 808 both of which arecontained within “Step-up Method” column 810. In this example, FIG. 8illustrates two various withdrawal bases: the account values 814 andlifetime benefit payment values 806. Additionally, as shown in the firstrow of “Account Value” column 816, the initial investment for thisexample is $100,000. “Return” column 818 illustrates the hypotheticalannual return as a percentage of account values 814, which areillustrated in “Account value” column 816. “Return” column 818 is shownas a positive percentage or a negative percentage, which indicatesaccount value growth or decline, respectively. “Account Value” column816 illustrates the hypothetical account value for each contract year.The years are tracked in “Year” column 802. For this example, whichutilizes the step-up method of the present invention, step-up 804 isapplicable if: (i) the present account value is greater than theprevious year's account value; and (ii) the present account value isgreater than the previously highest attained account value, known as the“high water mark.” If step-up 804 is applicable the account value isincreased by step-up 804. Step-up 804 is equal to the present accountvalue divided by the previous year's account value minus 1. Step-up 804is preferably a rising guarantee, however the maximum step-up 804 forany given year is 10%. For example, although the account value increasesby 42% at year 1, the payment base value 806 is only increased by 10%because of the 10% rising guarantee 804. Using these rules, “Step-upMethod” column 810 illustrates step-up 804 and new payment base value806 for each year according to the hypothetical performance of accountvalue 814 represented within “Account Value” column 816. It is importantto note that the “high water mark” rules as described herein are appliedto the step-up method utilized in the example above with respect to FIG.8. For example, a step-up will not occur unless the account valueincreases above the previously highest account value, i.e. the “highwater mark”. If the account value decreases for any given year, thepayment base does not increase and it does not decrease.

Turning to FIG. 9, shown is table 900, which corresponds with the datain table 800 of FIG. 8. Table 900 illustrates hypothetical lifetimebenefit payments, which correspond to various withdrawal bases: theoriginal payment base values 908, the stepped-up payment base values 910and the contract values 912. It is important to note that the presentinvention preferably allows the relevant life to select the presentpayment base (rather than the original payment base) or the presentcontract value (rather than the original contract value) as thewithdrawal base. In the example illustrated by FIG. 8, the payment basedoes not change from its original value because there are no additionalpremium payments and there are no withdrawals in excess of the lifetimebenefit payments. Therefore, in the example, the present payment base isalways equal to the original payment base. However, it should be notedthat in some situations the payment base value will change over timefrom its original value; preferably, the relevant value of interest inthe present invention is therefore the present payment base, not theoriginal payment base. In another embodiment, the original payment baseis used for the selection of the withdrawal base. The formula used tocalculate the lifetime benefit payment amounts is: Lifetime BenefitPayment=Withdrawal Percent×Withdrawal Base, wherein the WithdrawalPercent is 5%. As previously described, the withdrawal percent is usedto determine the amount of the lifetime benefit payment. The withdrawalpercent is determined at the later of: (i) the attained age of thecovered life on the most recent contract anniversary prior to the firstwithdrawal, or (ii) the contract anniversary immediately following thecovered life's 60^(th) birthday (or other predetermined age). In thiscase, the withdrawal percent was chosen arbitrarily. “% of OriginalPayment Base” column 902 illustrates the hypothetical lifetime benefitpayments according to no step-up provision of the payment base. “% ofStepped-Up Payment Base” column 904 illustrates the hypotheticallifetime benefit payments according to the rules of the step-up methodas described above with respect to FIG. 8. “% of Contract Value” column906 illustrates the hypothetical lifetime benefit payments according tothe contract value. The years are tracked in “Year” column 901.

FIG. 10 depicts graph 1000, which further illustrates the effects ofvarious withdrawal bases utilized and corresponds to the data providedby table 800 of FIG. 8 and table 900 of FIG. 9. Furthermore, graph 1000includes a “Benefit Payment @ 5%” scale 1002, which illustrates “BenefitPayment @ 5%” values 1010, 1012, and 1014 as a function of time 1016 forannuities associated with drawal bases 1004, 1006, and 1008respectively. The function of time 1016 is measured in years and isillustrated on the x-coordinate of graph 1000 so as to accuratelycorrespond to table 900 of FIG. 9. For example, graph 1000 illustrateswithdrawal “% of Stepped-Up Payment base” as a line with a squaresymbol, which initially starts at a “Benefit Payment @ 5%” value 1012 of$5,000. At year 1, as displayed on graph 1000, “% of Stepped-Up PaymentBase” withdrawal 1006 shows a positive incline from year 0 andillustrates a “Benefit Payment 5%” value 1012 of $5,500, whichaccurately corresponds to the appropriate values represented in table900 of FIG. 9. Further, as illustrated in graph 1000, “% of Stepped-UpPayment Base” withdrawal 1006 continues to positively incline andstabilize in accordance to the values represented in “% of Stepped-UpPayment base” column 904 as depicted in table 900 of FIG. 9.Accordingly, so long as the investment results in a positive return atsome period during the annuity contract, then the “Benefit Payment” willstep-up and never decrease until the payment base is decreased due towithdrawals. Additionally, as illustrated by graph 1000, thehypothetical lifetime benefit payments are the highest when using thecontract value as the withdrawal base. Conversely, the hypotheticallifetime benefit payments are the lowest when using the original paymentbase without a step-up as the withdrawal base.

More specifically, the present invention provides the relevant life withthe potential for greater lifetime benefit payments because the relevantlife can select whether to use the present payment base or the presentcontract value as the withdrawal base for the calculation of thelifetime benefit payments. It is important to note that for the purposesof illustration, the example represented by FIGS. 8, 9 and 10 illustratehypothetical lifetime benefit payments that are not actually requested.That is, the contract value is never reduced by lifetime benefitpayments because none are taken. The contract value simply tracks theperformance of the underlying funds. However, it is important to notethat the contract value will be reduced by the amount of each lifetimebenefit payment that is taken. In some situations, it is possible thatthe growth of the contract value from positive fund performance will notoutperform the impact of the decrease caused by the election of lifetimebenefit payments by the relevant life. Accordingly, there may reach apoint in time when the present payment base is greater than the presentcontract value. Therefore, hypothetically the relevant life may takeadvantage of the value of the contract value earlier in the contractterm and then switch to the present payment base later in the contractterm when deciding which to use for the withdrawal base. It is importantto note that the relevant life can elect to request an amount for thelifetime benefit payment that is less then the available amount for eachperiod.

The following description and examples further illustrate the preferredfeatures of the present invention.

The lifetime benefit payment is paid periodically: such as yearly,quarterly, monthly, weekly, etc. The lifetime benefit payment that isrequested by the relevant life for a given period may be any amountgreater than zero and equal to or less than the greater of (the paymentbase)×(the withdrawal percent); and (the present contract value)×(thewithdrawal percent). The available lifetime benefit payment isdetermined at each period by the aforementioned formula.

In most cases, the value of (the payment base)×(the withdrawal percent)will not be equal to (the present contract value)×(the withdrawalpercent). Therefore, the higher of these two values is the highestavailable lifetime benefit payment available for that period. However,the relevant life does not have to elect the highest possible availablelifetime benefit payment. The value that is requested, if any, for thelifetime benefit payment for that period will be subtracted from thecontract value, but not from the payment base. Therefore, the higher thelifetime benefit payment requested for a period, then the greater thepossible impact on the value of (the present contract value)×(thewithdrawal percent) for the subsequent period.

Preferably, the withdrawal percent is a function of the relevant life'sage. In one embodiment, once the first lifetime benefit paymentwithdrawal is taken, then the withdrawal percent is fixed for theremainder of the contract. In another embodiment, the withdrawal percentcontinues to rise with the relevant life's age, no matter if therelevant life has already begun to take lifetime benefit payments. Inanother embodiment, the withdrawal percent may either increase ordecrease over the term of the annuity. Alternatively, the withdrawalpercent may fluctuate over the term of the annuity.

In a further embodiment, the present method further comprises the stepof collecting a rider fee or collecting an account maintenance fee. Inanother embodiment, the present method further comprises the step of:calculating a death benefit for a beneficiary upon the death of therelevant life, wherein the death benefit is the greater of: (a) apredetermined guaranteed death benefit amount; and (b) the presentcontract value. Alternatively, the guaranteed death benefit is paid tothe beneficiary only if the relevant life dies during the accumulationphase. Preferably, the value of the annuity payments, if any, equals thevalue of the last guaranteed lifetime benefit payment.

In another embodiment, the present invention comprises a deferredvariable annuity contract comprising: (a) means for determining apresent payment base; (b) means for determining a present contractvalue; (c) means for determining a withdrawal percent (d) means forcalculating a lifetime benefit payment; wherein the lifetime benefitpayment withdrawal is determined according to the following formula:

LBP=the greater of:

-   -   “the guaranteed lifetime benefit payment”−(the present payment        base)×(the withdrawal percent); and    -   “the maximum lifetime benefit payment”−(the present contract        value)×(the withdrawal percent).

In another embodiment, the present invention comprises in a system foradministering a deferred variable annuity product during theaccumulation phase, the improvement comprising: administration meansoperative to pay a lifetime benefit payment, wherein the lifetimebenefit payment withdrawal is determined by the following formula:

LBP=the greater of:

-   -   “the guaranteed lifetime benefit payment”−(the present payment        base)×(the withdrawal percent); and    -   “the maximum lifetime benefit payment”−(the present contract        value)×(the withdrawal percent).

In another embodiment, the annuity product includes a step-up provisionwherein the payment base is increased in response to positiveperformance of the underlying investments of the contract for a givenperiod.

Other formulas may be utilized to determine the available lifetimebenefit payment amount, wherein the withdrawal base is related to othervalues besides the payment base and/or the contract value.

When a lifetime benefit payment withdrawal request is received, a testwill be performed to determine the greater of: (i) (the present paymentbase)×(the withdrawal percent); and (ii) (the present contractvalue)×(the withdrawal percent). The “guaranteed lifetime benefitpayment” is equal to (the present payment base)×(the withdrawalpercent); and the “maximum lifetime benefit payment” is equal to (thepresent contract value)×(the withdrawal percent). The relevant life mayrequest a lifetime benefit payment amount during each period that is upto the greater of the “guaranteed lifetime benefit payment” and the“maximum lifetime benefit payment”. See Example 1 below.

Example 1

The following example illustrates one embodiment of the present methodand system. The following starting parameters are set for the followingexample. Such starting parameters are strictly for the purposes ofillustration. For example, the withdrawal percentage may be in the rangeof 0% to 100%, and more preferably in the range of 0% to 50%.

Withdrawal Percentage:

5.0% for attained ages 60 to 64

5.5% for attained ages 65 to 69

6.0% for attained ages 70 to 74

6.5% for attained ages 75 to 79

7.0% for attained ages 80 and above

In the following example, no lifetime benefit payments are requested bythe relevant life. The values listed for the “guaranteed lifetimebenefit payment” and the “maximum lifetime benefit payment” are simplythe maximum available lifetime benefit payments for each period listed.

“guaranteed lifetime benefit payment”=(the present payment base)×(thewithdrawal percent)

“maximum lifetime benefit payment”=(the present contract value)×(thewithdrawal percent)

For the purposes of illustration, the relevant life is 60 years old onMar. 31, 1983.

TABLE 5 Lifetime Benefit Payment and Guaranteed Lifetime Benefit Paymentat Ages 60-63 for Annuity Contract and Related Values During theFollowing Periods Maximum Guaranteed Age of Lifetime Lifetime RelevantPeriod Premium Contract Benefit Payment Benefit Life Ended Payment ValuePayment Base Payment 60 Mar. 31, 1983 100,000 100,000 5,000 100,0005,000 61 Mar. 31, 1984 — 98,817 4,941 100,000 5,000 62 Mar. 31, 1985 —112,407 5,620 100,000 5,000 63 Mar. 31, 1986 — 145,528 7,276 100,0005,000

TABLE 6 Lifetime Benefit Payment and Guaranteed Lifetime Benefit Paymentat Ages 64-68 for Annuity Contract and Related Values During theFollowing Periods Maximum Guaranteed Age of Lifetime Lifetime RelevantPeriod Premium Contract Benefit Payment Benefit Life Ended Payment ValuePayment Base Payment 64 Mar. 31, 1987 — 166,825 8,341 100,000 5,000 65Mar. 31, 1988 — 166,472 9,156 100,000 5,500 66 Mar. 31, 1989 — 185,01210,176 100,000 5,500 67 Mar. 31, 1990 — 205,801 11,319 100,000 5,500 68Mar. 31, 1991 — 228,524 12,569 100,000 5,500

Having thus described the invention in rather full detail, it will beunderstood that such detail need not be strictly adhered to, but thatadditional changes and modifications may suggest themselves to oneskilled in the art, all falling within the scope of the invention asdefined by the subjoined claims.

While the present invention has been described with reference to thepreferred embodiment and several alternative embodiments, whichembodiments have been set forth in considerable detail for the purposesof making a complete disclosure of the invention, such embodiments aremerely exemplary and are not intended to be limiting or represent anexhaustive enumeration of all aspects of the invention. The scope of theinvention, therefore, shall be defined solely by the following claims.Further, it will be apparent to those of skill in the art that numerouschanges may be made in such details without departing from the spiritand the principles of the invention. It should be appreciated that thepresent invention is capable of being embodied in other forms withoutdeparting from its essential characteristics.

1. A computer system for processing data relating to an investmentarrangement having an account value dependent on investment performanceand available for withdrawal by an account owner, comprising: a datastorage device storing data indicative of a prior period account value,a present account value, a withdrawal factor value, a prior periodpayment base value, and a guarantee of payments available for a term ina plurality of periods without reduction of the payment base value; aprocessor in communication with the data storage device, the processorconfigured to: determine a present payment base value based on thepresent account value and the prior period payment base value, theprocessor being configured to limit a periodic increase in the paymentbase value to a maximum percentage; for each of a plurality of periods,including periods after a first withdrawal, determine an availablemaximum withdrawal without reduction of the payment base value for acurrent one of the periods based on a greater of: (i) a value based onthe withdrawal factor value and the present account value; and (ii) avalue based on the withdrawal factor value and the present payment basevalue; and provide data indicative of the determined available maximumwithdrawal amount via a communication bus to a display device fordisplay to a computer system user; and a display device in communicationwith the communication bus and the processor and configured to displaythe determined available maximum withdrawal amount.
 2. The computersystem of claim 1, wherein the investment arrangement is a deferredvariable annuity during the accumulation phase.
 3. The computer systemof claim 1, wherein the processor is further configured to determine theavailable maximum withdrawal without reduction of the payment base valueto be equal to a greater of: (i) a product of the withdrawal factorvalue and the present account value; and (ii) a product of thewithdrawal factor value and the present payment base value.
 4. Thecomputer system of claim 1, wherein the data indicative of the guaranteecomprises data indicative of a guarantee of payments available for aterm equal to a lifetime of a relevant life.
 5. The computer system ofclaim 1, wherein the data indicative of a withdrawal factor valuecomprises data indicative of a plurality of withdrawal factor values,each of the withdrawal factor values corresponding to a range of ages ofa relevant life.
 6. The computer system of claim 1, wherein the dataindicative of a guarantee of payments available for a term in aplurality of periods is data indicative of a guarantee of paymentsavailable in a plurality of one year periods.
 7. The computer system ofclaim 1, wherein the processor is further configured to, responsive toreceipt of data indicative of a request for a withdrawal, determine anupdated account value by subtracting an amount of the withdrawal fromthe present account value.
 8. The computer system of claim 1, whereinthe processor is further configured to, responsive to receipt of dataindicative of a request for a withdrawal, determine a sum of withdrawalsduring a current period, the sum including an amount of the receivedrequest for withdrawal, compare the sum of the withdrawals to theavailable maximum withdrawal without reduction of the payment basevalue, and, responsive to determining, as a result of the comparing,that the sum of withdrawals during the current period is not greaterthan the available maximum withdrawal without reduction of the paymentbase value, provide, to the display device, output data indicative thatthe payment base is not changed as a result of the withdrawal.
 9. Thecomputer system of claim 1, wherein the processor is further configuredto, responsive to receipt of data indicative of a request for awithdrawal, determine a sum of withdrawals during a current period, thesum including an amount of the received request for withdrawal, comparethe sum of the withdrawals to the available maximum withdrawal withoutreduction of the payment base value, and, responsive to determining, asa result of the comparing, that the sum of withdrawals during thecurrent period is greater than the available maximum withdrawal withoutreduction of the payment base value, determine a reduced payment basevalue as a result of the withdrawal, and provide to the display deviceoutput data indicative of the determined reduced payment base value. 10.A computer-implemented method of processing data relating to aninvestment arrangement having an account value dependent on investmentperformance and available for withdrawal by an account owner,comprising: determining by a processor a present payment base value ofthe account based on data indicative of a prior period payment basevalue and a present account value accessed by the processor from a datastorage device, the processor being configured to increase the paymentbase value on a periodic basis by no more than a maximum percentageincrease; for at least one of a plurality of periods, including periodsafter a first withdrawal, determining by the processor an availablemaximum withdrawal without reduction of the payment base value, based ona greater of: (i) a value based on the withdrawal factor value and thepresent account value; and (ii) a value based on the withdrawal factorvalue and the present payment base value, the available maximumwithdrawal being the maximum available, in accordance with associateddata indicative of a guarantee of payments available for a term in aplurality of periods without reduction of the payment base value;providing by the processor data indicative of the determined availablemaximum withdrawal amount via a communication bus to a display device;and displaying the determined available maximum withdrawal amount by thedisplay device.
 11. The computer-implemented method of claim 10, whereinthe investment arrangement is an annuity, and further comprising:accessing by the processor data indicative of a total of premiums paidin connection with the annuity; and determining an initial payment basevalue equal to the accessed total of premiums paid.
 12. Thecomputer-implemented method of claim 10, wherein the data indicative ofa guarantee comprises data indicative of a guarantee of paymentsavailable for a lifetime of a relevant life.
 13. Thecomputer-implemented method of claim 10, further comprising: receivingby the processor via a communication device data indicative of a requestfor a withdrawal; determining by the processor a sum of withdrawalsduring a current period, the sum including the amount of the receivedrequest for withdrawal; comparing by the processor the sum of thewithdrawals to the available maximum withdrawal without reduction of thepayment base value; and responsive to determining, as a result of thecomparing, that the sum of withdrawals during the current period is notgreater than the available maximum withdrawal without reduction of thepayment base value, providing, to the display device, output dataindicative that the payment base value is not changed as a result of thewithdrawal; and displaying by the display device data indicative thatthe payment base value is not changed as a result of the withdrawal. 14.The computer-implemented method of claim 10, further comprising;receiving by the processor via a communication device data indicative ofa request for a withdrawal; determining by the processor a sum ofwithdrawals during a current period, the sum including the amount of thereceived request for withdrawal; comparing by the processor the sum ofthe withdrawals to the available maximum withdrawal without reduction ofthe payment base value; responsive to determining, as a result of thecomparing, that the sum of withdrawals during the current period is morethan the available maximum withdrawal without reduction of the paymentbase value, determining by the processor a reduced payment base value asa result of the withdrawal; providing by the processor to the displaydevice output data indicative of the determined reduced payment basevalue; and displaying by the display device data indicative of thereduced payment base value.
 15. The computer-implemented method of claim10, further comprising: responsive to receipt of data indicative of arequest for a withdrawal, providing by the processor to a payment modulein communication with the processor data indicative of instructions forpayment of the withdrawal amount to a relevant life; and furnishing bythe payment module to the relevant life a payment in accordance with thedata indicative of instructions for payment provided by the processor.16. A non-transitory computer-readable storage medium having a pluralityof computer-executable instructed stored thereon, the instructions, whenexecuted by a processor, causing the processor to: access from a datastorage device data relating to an investment account, the data relatingto the investment account comprising a prior period payment base value,a present account value and a withdrawal factor value; determine apresent payment base value based on the present account value and aprior period account value, the instructions causing the processor tolimit a periodic increase in the payment base value to a maximumpercentage increase; for at least one of a plurality of periods,including periods after a first withdrawal from the investment account,determine an available maximum withdrawal without reduction of thepayment base value, for a current period based on a greater of: (i) avalue based on the withdrawal factor value and the present accountvalue; and (ii) a value based on the withdrawal factor value and thepresent payment base value, the available maximum withdrawal being themaximum available, in accordance with associated data indicative of aguarantee of payments available for a term in a plurality of periodswithout reduction of the payment base value; and provide output dataindicative of the determined available maximum withdrawal amount via acommunication bus to a display device for display to a computer systemuser.
 17. The non-transitory computer-readable storage medium of claim16, wherein the instructions further cause the processor to: access fromthe data storage device data indicative of a prior period account value;compare the prior period account value to the present account value;responsive to determining, as a result of the comparing, that thepresent account value is not greater than the prior period accountvalue, determine that the present payment base value is equal to theprior period payment base value; and provide output data indicative ofthe present payment base value via the communication bus to the displaydevice for display to a computer system user.
 18. The non-transitorycomputer-readable storage medium of claim 16, wherein the instructionsfurther cause the processor to provide data indicative of instructionsfor generation of a customer communication including data indicative ofthe determined maximum withdrawal amount.
 19. The non-transitorycomputer-readable storage medium of claim 16, wherein the instructionsfurther cause the processor to determine the current account value byaccessing from the data storage device data indicative of values of aplurality of sub-accounts, and summing the values of the sub-accounts todetermine the current account value.
 20. The non-transitorycomputer-readable storage medium of claim 16, wherein the dataindicative of the withdrawal factor value comprises data indicative ofthe withdrawal factor value dependent on an age of a relevant life.